Consultant Insight: Ocean carriers leaving airfreight carriers in the dust

As shippers scramble to ensure they have enough inventory to meet current strong demand, spot rates for air and ocean freight are at unbelievable highs as capacity remains at a premium for both modes of transportation. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] While the current environment presents challenges for all involved, the ocean freight market is taking steps to diversify and support trends impacting the market. These steps began prior to the pandemic while the airfreight market struggled with operating costs, declining volumes and more. However, one segment of the airfreight market has continued to grow in strength since before the pandemic: Express. This is thanks primarily to FedEx and UPS, and the growth of e-commerce. Trends that have accelerated since early 2020 establish e-commerce as an area with huge growth potential to the airfreight market and although many airfreight carriers are embracing e-commerce, current capacity is insufficient to meet demand. E-commerce involves much more than consumers ordering items from their laptops, mobile devices or in stores — it’s businesses transacting with their suppliers, wholesalers and supply chain partners. At the end of the day, e-commerce is about creating an ecosystem to support new retail requirements. Maersk noted this digital ecosystem trend in 2016, and created quite the stir when it announced that it would become an end-to-end logistics provider. “We’re building this company that is a global integrated container business, a company very similar to UPS and FedEx,” Maersk CEO Soren Skou told investors in 2018. Indeed, Maersk has made several acquisitions since 2016 to extend its traditional ocean freight services further inland, including recent purchases of warehouse provider Performance Team and fulfillment provider Visible SCM in the U.S. and just this week, the acquisition of Portuguese e-fulfillment startup HUUB. Meanwhile, CMA CGM, another heavy-hitter in ocean freight transportation and parent company of freight forwarder CEVA Logistics, announced earlier this year that it had launched CMA CGM Air Cargo with four A330-200Fs operated on a CMI basis by Air Belgium. Since then, a number of international routes have been announced , including to Chicago, New York, Atlanta, Dubai, Beirut and Istanbul. “With its services to Dubai, the CMA CGM Group can also provide its customers with a combined Sea-Air offer comprising shipping, logistics and airfreight. That will give them the benefit of an end-to-end, agile, full-service offering,” according to the company’s release. This month, the carrier’s growth strategy was revealed further, as reported by our sister publication Cargo Facts . CMA CGM will establish a French Air Operator’s Certificate and plans to launch service with 777 freighters next year. Yet another ocean freight provider is moving beyond ocean freight services with the acquisition of a Brazilian logistics company. MSC will acquire a controlling stake of up to 67% in Log-In Logistica Intermodal. “MSC believes that, with this transaction, Log-In will be able to further enhance its customer-centric approach to all its existing customers in all its services, including cabotage, inland solutions and container terminal operations,” according to a company statement. MSC has also expanded rail operations between Europe and Asia and within Europe as part of a multimodal offering. As ocean freight carriers expand their reach beyond transporting goods from port to port, airfreight carriers may be facing an identity crisis. We’ve seen some fantastic airfreight solutions from various air carriers, but much of the true air transformation is coming from the likes of FedEx, UPS, Amazon and Alibaba — in other words, companies with a major focus on e-commerce cargo. The investments are likewise aimed at addressing the growing B2B and B2C e-commerce demand and improving shipment speed and options. Speed improvements are coming to address the “need it now” mentality of online buyers, while providers are increasingly searching for options to address transportation capacity constraints, warehouse and fulfillment needs, last-mile delivery needs and other options that may not even be known yet. With only a handful of carriers pursuing these options currently, the question remains: Which will be the airfreight market’s Maersk, CMA CGM or MSC? All-cargo and combination airlines have a role to play in this need for agile, resilient supply chains should they wish to participate. The option of whether to stick with airport-to-airport transport or move beyond and offer transformational value-added services is up to them.

Consultant Insight: Ocean carriers leaving airfreight carriers in the dust

EFL Global bolsters supply-chain near sourcing with IDEA Logistics acquisition

August transactions underline strength of conversion market

August transactions underline strength of conversion market

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password